2
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter ended October 30, 1996 Commission File No. 0-8299
CAMELOT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Colorado 84-0691531
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Camelot Place, 17770 Preston Road, Dallas, Texas 75252
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (972) 733-3005
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by this
report.
Shares outstanding at
Class October 31, 1996
Common stock, $0.01 par value 25,016,059
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CAMELOT CORPORATION AND SUBSIDIARIES
I N D E X
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Page No.
Part I FINANCIAL INFORMATION (UNAUDITED):
Item 1. Consolidated Balance
Sheets 3
Consolidated Statements of
Operations 5
Consolidated Statements of
Cash Flows 6
Notes to Consolidated
Financial Statements 8
Items 2. Management's Discussion
and Analysis of Financial
Condition and Results of
Operations 9
Part II OTHER INFORMATION 11
</TABLE>
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CAMELOT CORPORATION AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
ASSETS
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October 31, 1996 April 30, 1996
(Unaudited) (Audited)
CURRENT ASSETS
Cash and cash equivalents $7,164,650 $9,870,599
Trading securities 3,898,515 1,341,508
Securities available for sale 8,268 945,777
Accounts receivable, net of allowance for
doubtful accounts of $2,353 and $11,415
at October 31,1996 and April 30, 1996 261,482 241,837
Prepaid expenses 103,765 215,073
Inventories, net of allowance for
obsolescence of $584,969 and $198,000 at
October 31, 1996 and April 30, 1996 945,970 1,272,973
Total current assets 12,382,650 13,887,767
PROPERTY, PLANT AND EQUIPMENT - AT COST
Office equipment and fixtures 1,717,557 1,363,484
Leasehold improvements 274,112 222,124
Less accumulated depreciation (554,250) (453,450)
Total property,plant and equipment-
at cost 1,437,419 1,132,158
OTHER ASSETS
Preferred stock - related party 530,917 530,917
Licenses and product development, net of
$393,926 and $151,979 accumulated amort.
at October 31,1996 and April 30,1996 1,192,807 1,141,021
Other 1,038,447 10,000
Total other assets 2,763,171 1,681,938
$16,583,240 $16,701,863
</TABLE>
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CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
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October 31, 1996 April 30, 1996
(Unaudited) (Audited)
CURRENT LIABILITIES
Accounts payable $ 740,504 $ 777,181
Accrued expenses 222,065 194,329
Net current liabilities of
discontinued operations - 50,185
Total current liabilities 962,569 1,021,695
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 50,000,000
shares authorized, 26,165,865 and 19,452,191
shares issued at October 31, 1996 and
April 30, 1996, respectively 261,659 194,522
Preferred stock, $.01 par value,
100,000,000 shares authorized,
2,158,056 and 10,143,389
shares issued and outstanding at
October 31, 1996 and April 30, 1996
respectively 21,581 101,434
Additional paid-in capital 32,371,171 30,410,954
Accumulated deficit (14,241,701) (12,186,463)
Unrealized gain (loss) on
available-for-sale securities - (50,548)
Less: treasury stock, at cost,
1,149,806 and 1,149,806
shares at October 31, 1996
and April 30, 1996 (2,714,575) (2,714,575)
Notes receivable related to purchase
of common stock (77,464) (75,156)
Total stockholders' equity 15,620,671 15,680,168
$16,583,240 $16,701,863
</TABLE>
See accompanying notes to these consolidated financial statements.
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CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended Six Months Ended
October 31, October 31,
1996 1995 1996 1995
SALES $ 196,599 $527,144 $8,552,425 $583,453
COST OF SALES 863,450 85,599 1,162,850 120,037
GROSS PROFIT (LOSS) (666,851) 441,545 7,389,575 463,416
OPERATING EXPENSES:
General and administrative 2,008,647 1,250,801 4,032,085 1,824,241
Depreciation and amortization 198,813 50,048 416,682 79,693
2,207,460 1,300,849 4,448,767 1,903,934
INCOME (LOSS) FROM OPERATIONS (2,874,311) (859,304) 2,940,808 (1,440,518)
OTHER INCOME (EXPENSES):
Interest expense - - - (10,289)
Interest income 106,332 2,837 217,498 6,719
Dividend income - affiliate 11,665 15,553 23,329 23,329
Unrealized loss-Trading
securities (1,951,257) - (4,500,488) -
Loss on disposition of
assets (12,839) (7,609) (656,717) (5,104)
(1,846,099) 10,781 (4,916,378) 14,655
INCOME (LOSS) FROM CONTINUING
OPERATIONS (4,720,410)(848,523)(1,975,570)(1,425,863)
DISCONTINUED OPERATIONS:
Gain (Loss) on disposal (833) 49,830 (1.666) 14,155
(833) 49,830 (1,666) 14,155
NET INCOME (LOSS) (4,721,242) (798,693)(1,977,236)(1,411,708)
DIVIDENDS ON PREFERRED STOCK (4,800) (33,207) (78,002) (60,122)
NET LOSS ATTRIBUTABLE TO
COMMON STOCKHOLDERS $(4,726,042) $(831,900) $(2,055,238) $(1,471,830)
INCOME (LOSS) PER SHARE:
Loss from continuing operations $(.192) $(.060) (.084) $ (0.109)
Income (Loss)
from discontinued operations (.000) .003 (.000) .001
Dividends on preferred stock (.000) (.002) (.003) (.004)
NET LOSS PER COMMON SHARE $(.192) $(.059) $(.087) $(.112)
WEIGHTED AVERAGE OF COMMON
STOCK OUTSTANDING 24,627,239 14,048,957 23,522,398 13,023,023
See accompanying notes to these consolidated financial statements.
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CAMELOT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
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Six Months Ended
October 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,977,236) $(1,411,708)
Adjustments to reconcile new income (loss)
to net cash from operating activities:
Securities received as revenue (7,627,000) -
Depreciation and amortization 405,701 79,693
Gain on sale of subsidiary - (14,155)
(Gain) loss on disposal of assets 656,716 -
Non cash transactions for services - 57,286
Write down (up) of securities to
market value 4,500,488 -
Write-off (provision) uncollectable
accounts receivable (6,068) (21,064)
Provisions for inventory obsolescence 386,969 -
Change in assets and liabilities
Accounts and accrued expenses (14,594) (442,969)
Prepaid expenses and other 80,771 (1,071,886)
Inventories (59,967) (582,880)
Accounts payable and accrued expenses (59,126) 479,030
Net cash used by operating activities (3,713,346) (2,928,653)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of property and equipment (526,801) (547,528)
Purchases of marketable securities (772,003) (256,927)
Proceeds from sale of property and equipment - -
Proceeds from disposition of assets of
discontinued operations - (112,611)
Proceeds from sale of marketable securities 1,731,436 -
Loan to Director of Company (1,000,000) -
Deposits - (12,505)
Licenses and product development (294,733) (1,268,248)
Net cash used by investing activities (862,101) (2,197,819)
CASH FLOW FROM FINANCING ACTIVITIES:
Sale of common stock - 4,508,859
Sale of preferred stock 1,947,500 822,866
Dividends on preferred stock (78,002) (60,122)
Payments on debt - (130,200)
Net cash provided (used) by financing
activities 1,869,498 5,141,403
NET INCREASE (DECREASE) IN CASH (2,705,949) 14,931
CASH AT BEGINNING OF PERIOD 9,870,599 149,529
CASH AT END OF PERIOD $7,164,650 $ 164,460
SUPPLEMENTAL INFORMATION:
Cash paid for interest $ -0- $ 10,289
See accompanying notes to these consolidated financial statements.
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CAMELOT CORPORATION AND SUBSIDIARIES
SCHEDULE OF NONCASH ACTIVITIES
(UNAUDITED)
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Six Months Ended
October 31,
1996 1995
On July 11,1995,the Company issued 600,000
shares of restricted common stock to Forme $ $450,000
Capital, Inc. ("Forme")for $450,000. In
connection therewith, Forme appliedprincipal
of $450,000 to certain promissory notes of the
Company owed to Forme.
On August 8,1995,the Company issued 326,530 599,999
shares ofrestricted common stock for prepaid
advertising.
On August 31, 1995 and September 29,1995,the Company
issued 28,643 shares of restricted common stock 57,286
for compensation of services
On October 31,1995,the Company issued 67,470
restricted common stock for acquisition of software. 350,000
During the quarter ended July 31, 1996, the 7,627,000
Company concluded a distribution agreement with
a subsidiary of Meteor Technology PLC in exchange
for stock in Meteor.
During the six month ended October 31,1996, the
Company recognized an unrealized writedown of (4,500,488)
it's investment in Meteor Technology PLC.
During the quarter ended July 31, 1996, the (643,878)
Company recognized a loss on the August 1996
disposal of the remaining investment in Firecrest.
During the six months ended October 31, 1996, the Company's
preferred stock was converted to common stock as follows:
112,000 Series BB preferred for 76,877 shares of
restricted common
333,332 Series G preferred for 224,770 shares of
restricted common
9,908,333 Series H preferred for 6,412,027 shares of
restricted common
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CAMELOT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
ITEM 1. Financial Statements and Principles of Consolidation
The accompanying condensed consolidated financial statements have
been prepared in accordance with the instruction to Form 10-Q, and do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for a fair
presentation have been included. These statements should be read in
conjunction with the audited financial statements and notes thereto
included in the Registrant's annual Form 10-K filing for the year
ended April 30, 1996.
The consolidated financial statements include the accounts of the
Company and all majority-owned subsidiaries. All intercompany
transactions have been eliminated.
ITEM 2. Management Discussion and Analysis of Financial Condition
and Results of Operations
The Company's revenue for the quarter end of October 31, 1996 was
$196,599 compared with $527,144 in 1995. The revenue for the six
months was $8,552,425 compared with $583,453 in 1995. The loss for
the three month period was $4,721,242 (including an unrealized loss on
trading securities of $1,951,257) compared with $798,693 in 1995. The
loss for the six month period was $1,977,236 (including an unrealized
loss on trading securities of $4,500,488) compared with a loss of
$1,411,708 in 1995.
Revenue during the quarter was limited. The introduction of the
latest version of DigiPhone in the summer and the length of time
required to distribute through the wholesale and retail channels,
together with the return of older versions of DigiPhone, were
contributing factors in slower than anticipated sales of the software.
Retail revenue was hampered due to the conversion of the Mr. CD Rom
Stores concept into the Software @ Cost plus 10% concept which
disrupted trading and required new personnel changes and training
methods to be implemented. Revenue in the Internet Access subsidiary
was limited to test marketing in six cities nationwide, with emphasis
being placed on market research and analysis of initial sales. The
quarterly results were also effected by a lack of license fees from
the sale of distribution rights, a write down of retail and wholesale
software inventory, and a further write down in the value of trading
securities to reflect a decline in the share price of Meteor
Technology PLC on the Alternative Investment Market of the London
Stock Exchange.
The consolidated balance sheets for the period shows stockholder's
equity of $15,620,671 compared with $15,680,168 at the year ended
April 30, 1996. Total assets were $16,583,240 compared with
$16,701,863 for the same periods.
During the quarter, the Company commenced shipment of DigiPhone Deluxe
and DigiPhone for Mac as well as making available free 30 day versions
of DigiPhone and DigiPhone for Mac software on it's Internet web page
at http://www.digiphone.com. Both products were well received by
retailers, but the inventory build up by retailers for the Christmas
period was slower than anticipated, and the placement of the software
products on retail shelves was not wide spread until the end of
September 1996.
During the period the Company announced that DigiPhone Europe, the
exclusive European distributor of DigiPhone has launched DigiPhone
software in the United Kingdom with a live Dallas/London demonstration
to approximately 200 press, trade and corporate officers in London,
England. Further, the Company announced that it will begin
distributing with DigiPhone Deluxe the new Internet Explorer version
3.0 browser software from Microsoft Corporation. The Internet
Explorer software will also be provided to new subscribers of Camelot
Internet Access Services.
On November 22, subsequent to the period under review, the company
entered into an agreement with Meteor Technology PLC ("Meteor") to
sell the international rights to distribute DigiPhone. Meteor, which
through its subsidiary DigiPhone Europe already has the European
distribution rights for DigiPhone, acquired the rights for the rest of
the world (excluding the USA, Canada and Europe) for approximately
$1,600,000 payable by the issuance of 1,000,000 pounds 1996-2001 7%
convertible loan stock, convertible into ordinary shares of Meteor at
55p per share. In addition, the Company subscribed for a further
1,000,000 pounds loan stock for cash. Upon the conversion of the
total 2,000,000 pound loan stock the Company will own approximately
19% of the enlarged issued share capital of Meteor. Meteor is public
company listed on the Alternative Investment Market of the London
Stock Exchange.
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PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Exhibits and Reports on Form 8-K.
(a) Exhibits:
3(1) Articles ofIncorporation: Incorporated by reference to
Registration Statement filed
on Form 10, June 23,1976.
3(2) Bylaws: Incorporated by
reference as
immediately above.
(10) 1991 Incentive Stock
Option Plan: Incorporated
by reference to
proxy statement for 1991.
(b) Reports on Form 8-K: December 13, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereto duly authorized.
CAMELOT CORPORATION
(Registrant)
By:______________________________
DANIEL WETTREICH, President
Treasurer and Principal
Financial Officer
Date: December 14, 1996
</TABLE>
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<CIK> 0000013033
<NAME> CAMELOT CORPORATION
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> APR-30-1997 APR-30-1997
<PERIOD-END> JUL-31-1996 OCT-31-1996
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<SECURITIES> 6859719 3898515
<RECEIVABLES> 632029 261482
<ALLOWANCES> 2353 2353
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12331 21581
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